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2016-11-29 10:57:33

ZBH

Zimmer Biomet

$103.24

1.26 (1.24%)

, SYK

Stryker

$115.93

2.975 (2.63%)

10:57

11/29/16

11/29

10:57

11/29/16

10:57

Zimmer Biomet rises as Citi ups rating on Price nod to lead HHS

Shares of Zimmer Biomet Holdings (ZBH) are on the rise after Citi analyst Amit Hazan upgraded the stock to Neutral as he believes the nomination of House Representative Tom Price to head the Department of Health and Human Services "significantly increases" the likelihood that the Centers for Medicare & Medicaid Services, or CMS, bundled payment programs may be reduced in size and made voluntary, if not completely eliminated. POSSIBLE END OF BUNDLED PAYMENTS: Citi's Hazan upgraded Zimmer Biomet to Neutral from Sell, saying the selection of Tom Price to head Health and Human Services "all but ensures current bundled payment programs may be significantly diluted." The analyst told investors that this removes a major risk to the U.S. reconstruction market and to his previous Sell thesis on Zimmer Biomet. Hazan pointed out that Tom Price himself wrote to CMS just two months ago, leading a sizeable Republican effort to have the Center for Medicare and Medicaid Innovation, or CMMI, "cease all current and future planned mandatory initiatives under CMMI." These initiatives include CJR hip and knee bundled payments, the proposed cardiac bundled payment models for CABG, and the proposed Part B drug payment model, he contended. Therefore, once Price is confirmed to head up Health and Human Services, he can undo these programs immediately, with the analyst expecting him to do so. Nonetheless, Hazan pointed out that Price has been extremely vocal about his preference to "Repeal and Replace" the Affordable Care Act, adding that he believes the nominee's own published reform plan would generally increase the number of uninsured and possibly significantly increase insurance costs for the elderly population, which is a possible future negative headwind for the ortho group. Seeing a lower probability of a downside scenario, Hazan also raised his price target on Zimmer shares to $108 from $95. STILL BEARISH ON STRYKER: Hazan, however, reiterated a Sell rating on Zimmer Biomet's peer Stryker (SYK), saying he views the positive change in bundled payment risk as partly offset by new hospital capital spending risk next year. Nonetheless, the analyst noted that he acknowledges that the situation remains fluid. PRICE ACTION: In morning trading, shares of Zimmer Biomet have gained about 1% to $103.12.

Cleveland Research analyst Rob Eich said checks indicate Zimmer's hip and knee sales in the US are being impacted by changes/issues in raw material sourcing and expects COGS to be higher near-term. The analyst said issues have been resolved but could take months to rebuild supply. Eich rates Zimmer a Neutral.

11/29/16

SBSH

11/29/16UPGRADESBSHNeutral

Zimmer Biomet upgraded to Neutral from Sell at Citi

11/29/16

SBSH

11/29/16UPGRADETarget $108SBSHNeutral

Citi upgrades Zimmer to Neutral on Tom Price appointment

Citi analyst Amit Hazan upgraded Zimmer Biomet Holdings to Neutral saying the selection of Tom Price to head Health and Human Services "all but ensures current bundled payment programs may be significantly diluted." This removes a major risk to the U.S. reconstruction market, Hazan tells investors in a research note. He raised his price target for Zimmer shares to $108 from $95. The analyst keeps a Sell rating on Stryker (SYK).

Piper Jaffray analyst Matt O'Brien noted that Zimmer Biomet (ZBH) reported "slightly weak" Q3 results and cut its guidance due to internal supply issues. However, he thinks the company should be able to re-engage customers and move closer to market growth next year after resolving the issues, which he expects it to fix in "probably" the next two quarters. Noting that the post-earnings decline puts Zimmer's value at a 31% discount to peer Stryker (SYK), which is much wider than average, the analyst points to the pullback as a buying opportunity and keeps an Overweight rating on Zimmer shares.

11/01/16

BMOC

11/01/16UPGRADEBMOCMarket Perform

Stryker upgraded to Market Perform from Underperform at BMO Capital

11/01/16

BMOC

11/01/16UPGRADEBMOCMarket Perform

Stryker upgraded on positive catalysts at BMO Capital

As noted earlier, BMO Capital upgraded Stryker to Market Perform from Underperform. Analyst Joanne Wuensch says that the company's Q3 results were very strong, while the company's upcoming analyst event should alleviate investors' concerns. The analyst had previously expected the company to be hurt by the increased use of bundled payments, but she says that this has not materialized. Target $125.

Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Chesapeake Utilities (CPK) initiated with a Neutral at Ladenburg. 2. CONSOL (CNX) initiated with a Neutral at Goldman. 3. Johnson Controls (JCI) assumed with an Equal Weight at Barclays. 4. American Midstream Partners (AMID) initiated with a Buy at Janney Capital. 5. Brookfield Infrastructure (BIP) coverage resumed with an Outperform at Wells Fargo. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.

Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Abercrombie & Fitch (ANF) downgraded to Sell from Hold at Argus with analysts John Eade and Katelyn Bayone citing the company's third quarter miss and what they see as its "challenging sales outlook for the remainder of the year." 2. Duluth Holdings (DLTH) downgraded to Hold from Buy at Stifel and to Market Perform from Outperform at William Blair. 3. DAVIDsTEA (DTEA) downgraded to Market Perform from Outperform at BMO Capital and to Market Perform from Outperform at William Blair. 4. Hilton (HLT) downgraded to Outperform from Buy at CLSA with analyst Jon Oh citing valuation. 5. Horizon Pharma (HZNP) downgraded to Neutral from Buy at Mizuho. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.

Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. AstraZeneca (AZN) upgraded to Outperform from Market Perform at Leerink with analyst Seamus Fernandez saying the recent weakness in shares provides an "excellent entry point" ahead of several critical pipeline events that have the potential "to transform this giant into an exciting growth story." 2. Autodesk (ADSK) upgraded to Buy from Hold at Canaccord with analyst Richard Davis citing expectations for improved free cash flow, as he sees a path to $6 in FCF by 2020 and $11 per share in 2022. 3. Eaton (ENT) upgraded to Overweight from Neutral at JPMorgan with analyst Ann Duignan saying optionality of the company's balance sheet should offset broad weakness across its end markets. 4. Fluor (FLR) upgraded to Buy from Neutral at Citi with analyst Andrew Kaplowitz saying the company is positioned to outperform given amid oil and gas capex stabilization, a lift off the bottom in mining off the bottom and "muted" 2017 expectations. 5. Sysco (SYY) upgraded to Neutral from Sell at Goldman. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.